Although every penny saved may help support a valuable cause, it is important that an organization not let its use of volunteers lead to legal liability. Volunteers are the foundation upon which many successful nonprofits are built. Properly utilized, volunteers enable a nonprofit to devote valuable capital and resources elsewhere in the organization, allowing it to have a greater impact on its desired cause. Although the work of volunteers is valuable to a nonprofit’s mission, an organization’s management must exercise caution in engaging volunteers to ensure the nonprofit does not inadvertently misclassify individuals as volunteers when they may be considered employees under applicable law. With the holidays upon us, nonprofit organizations often rely more heavily on volunteers. Consequently, they should take extra care that its volunteers are not in fact employees.
As Ryan Portugal explains in our latest edition of Requisite, which focuses on issues related to the operation, management, and sustainability of nonprofit organizations, circumstances in which a volunteer will be treated as an employee under wage and hour laws can have costly legal ramifications for nonprofit organizations.
A person can provide services to a company as an employee or an independent contractor depending upon the nature of the relationship between the service provider and the company. Misclassification of employees as independent contractors remains a primary focus of many government agencies, including the IRS, U.S. Department of Labor, Florida Department of Economic Opportunity Reemployment Assistance Programs, and Florida’s Division of Workers’ Compensation. Investigations by these agencies can be extremely costly, time-consuming, and even lead to personal liability and criminal penalties!
The presentation in the following link explains the detailed federal and Florida tests that are used by these four agencies to properly classify service providers. It also provides practical examples in which the tests can be applied. Additionally, the presentation includes guidance to help mitigate the potential for employer liability regarding other wage and hour complexities and pitfalls.